The Central Provident Fund (CPF) is an essential part of Singapore’s social security system, requiring contributions from both employers and employees. Understanding how CPF contributions are calculated helps you plan your finances, verify your payslips, and make informed decisions. This guide details the CPF calculation process, including contribution rates, allocation across accounts, and important considerations.
1. Overview of CPF Contributions
CPF contributions are based on your monthly wage, which includes your basic salary and additional wages such as bonuses, overtime pay, and commissions. Contributions are shared between employers and employees, with rates varying by age, income level, and residency status.
2. Key Factors in CPF Calculation
2.1. Age Group
CPF contribution rates are tiered by age. Younger employees have higher contribution rates, while older workers see reduced rates to cater to their immediate financial needs.
2.2. Wage Type
- Ordinary Wages (OW): Fixed monthly salary.
- Additional Wages (AW): Irregular income, such as bonuses, commissions, and allowances.
2.3. CPF Contribution Ceiling
CPF contributions are capped based on:
- Ordinary Wage Ceiling: Monthly OW up to S$6,000.
- Additional Wage Ceiling: Total AW contributions capped at S$102,000 minus annual OW contributions.
3. CPF Contribution Rates
3.1. For Singapore Citizens and Permanent Residents (PRs)
Contribution rates vary by age:
Employees Aged 55 and Below (2024 onwards)
| Income Bracket | Employee Contribution (%) | Employer Contribution (%) | Total Contribution (%) |
|---|---|---|---|
| ≤ S$750 | Graduated rates apply | Graduated rates apply | Graduated rates apply |
| > S$750 | 20% | 17% | 37% |
Reduced Rates for Older Workers
Contribution rates taper for workers aged above 55:
| Age Group | Employee Rate | Employer Rate | Total Rate |
|---|---|---|---|
| 56–60 | 13% | 13% | 26% |
| 61–65 | 7.5% | 9% | 16.5% |
| > 65 | 5% | 7.5% | 12.5% |
3.2. For Permanent Residents (PRs)
PR contributions follow a phased approach:
- 1st Year: Lower contribution rates.
- 2nd Year: Slightly higher rates.
- 3rd Year Onwards: Full contribution rates.
4. Allocation of CPF Contributions
Your CPF contributions are distributed across four accounts based on your age:
| Account | Purpose | Age Group | Allocation (%) |
|---|---|---|---|
| Ordinary Account (OA) | Housing, education, investments | ≤ 35 | 23% (of 37%) |
| Special Account (SA) | Retirement savings | ≤ 35 | 6% (of 37%) |
| MediSave Account (MA) | Medical expenses, insurance premiums | ≤ 35 | 8% (of 37%) |
| Retirement Account (RA) | Created at age 55 for retirement | > 55 | Depends on RA needs |
5. CPF Calculation Example
5.1. Scenario
- Age: 30 years
- Monthly Wage (OW): S$5,000
- Additional Wage (AW): S$2,000
5.2. Step-by-Step Calculation
Step 1: Calculate Total Contributions
- Ordinary Wage (OW) Contributions:
- CPF Contribution = 37% × S$5,000 = S$1,850
- Employee: 20% × S$5,000 = S$1,000
- Employer: 17% × S$5,000 = S$850
- Additional Wage (AW) Contributions:
- AW Ceiling: S$102,000 − (S$5,000 × 12) = S$42,000
- Contributions apply only to AW ≤ S$42,000.
- CPF Contribution = 37% × S$2,000 = S$740
- Employee: 20% × S$2,000 = S$400
- Employer: 17% × S$2,000 = S$340
Step 2: Allocate Contributions
Using the allocation rates for those aged 30:
| Account | OW Contribution (S$) | AW Contribution (S$) | Total (S$) |
|---|---|---|---|
| OA | S$1,150 | S$460 | S$1,610 |
| SA | S$300 | S$120 | S$420 |
| MA | S$400 | S$160 | S$560 |
6. Adjustments and Considerations
6.1. Pro-Rated Contributions
If you work for only part of the month, CPF contributions are calculated on a pro-rata basis based on the number of days worked.
6.2. Voluntary Contributions
Individuals can make voluntary top-ups to their own or family members’ accounts, subject to the Annual Contribution Limit of S$37,740.
6.3. CPF Contribution for Non-Resident Employees
Foreign employees on Employment Passes or S Passes do not contribute to CPF.
7. Checking and Verifying CPF Contributions
- Monthly Payslip: Verify CPF contributions against the CPF component breakdown.
- CPF Mobile App: Use the app to check contribution details.
- myCPF Portal: Log in with Singpass to view detailed contribution statements.
8. Frequently Asked Questions (FAQs)
Q1. What happens if my employer doesn’t contribute CPF?
Employers who fail to pay CPF contributions are violating the CPF Act. Employees can report non-compliance to the CPF Board.
Q2. Is CPF contribution mandatory for part-time workers?
Yes, part-time workers earning more than S$50/month are entitled to CPF contributions.
Q3. Can I stop my CPF contributions?
No, CPF contributions are mandatory for all eligible employees.
Q4. Are CPF contributions taxable?
CPF contributions are tax-free, but interest earned from CPF savings is non-taxable.
9. Future Adjustments to CPF
CPF contribution rates and allocation percentages are periodically reviewed to adapt to Singapore’s evolving economic and demographic landscape. Keep an eye on government announcements for updates.